Responding to PAYD Criticisms

PAYD pricing is often criticized based on misconceptions of its methods and impacts. For example, some people assume that it requires tracking when, where and how people drive, which is true of some proposed systems, but not for basic PAYD which only requires one annual verified odometer reading, which is information already collected when vehicles are serviced.

Another common misconception is that most motorists, or most rural motorists, would pay more. In fact, since PAYD pricing incorporates all existing rating factors, including territory (a vehicle’s home district), rural motorists would pay less per kilometer than urban motorists on average, and if rural drivers reduce their mileage by 10-15% as predicted, about two thirds of all rural motorists would save money, particularly lower-income drivers who tend to drive less than average and are particularly responsive to money saving opportunities.

Estimated PAYD Savings by Household Income

Because annual vehicle travel tends to increase with income and lower-income motorists tend to respond most to money saving opportunities, PAYD insurance tends to be progressive with respect to income: lower-income motorists benefit more than higher incomes motorists.


Below is an example of such criticism and our response:

Dear PAYD in BC,

I have serious concerns about your proposal because it does not address the housing issue facing people who work in Vancouver. I can not afford to live in Vancouver unless I rent which would mean throwing away money I currently invest in my home. It means having no home to sell to create a nest egg later in life in order to secure the very expensive assisted living housing we all will need later. It also would mean spending a lot more on housing. I currently spend $1700/mo and to get a decent rental which would allow pets I would be spending $2500-3000. Purchasing would be even more expensive than this. 

I work in an industry that is primary based in downtown Vancouver (the tech industry). The chances of finding a job in my field (I am an iOS programmer) in my city or along the route of my nearest bus route is very very slim. If I were able to find a job closer to home I would be taking a significant pay cut, probably 30-40%. I wouldn’t even be able to afford my current home. 

When I need to commute to and from work by bus I spend 3.5-4 hours per day commuting. In the winter busses are often delayed significantly. One time it took me 2.5 hours to get to work, another time the busses were simply cancelled for several hours because the highway was too slippery. 

In addition to this the only grocery store nearby is Walmart which often has rotten produce so we do not shop there. The next nearest grocery store is 20min drive. 

With commuting to work and buying groceries and honestly not much else as I don’t do very much I drive 16,000-17,000 Km per year. I have no choice but to do this because I can not afford housing in Vancouver and despite trying I have not been able to find work nearby. 

I can not see your pay for use model working in the Metro Vancouver area because of the housing issue. I am by far not the only person in this situation. Nearly half my coworkers commute in, some from further than me, and many with kids meaning they are additionally driving their families around to events and school and driving much more than I am. 

I would like to know what your organizations’ thoughts are on this matter. 

Thank you,

Name Withheld


Our Response:

Thank you for your comments. We appreciate your feedback.

We believe that you are exaggerating the costs and underestimating the benefits of more efficient insurance pricing.

With Pay As You Drive insurance pricing, a motorist that drives average annual mileage in their rate class pays the same as they do now, but has a new opportunity to save money by reducing annual vehicle travel. Vancouver area motorists that drive less than about 18,000 annual kilometers, and Fraser Valley area motorists who drive less than about 22,000 annual kilometers, would pay less under PAYD. Since you currently drive 16,000-17,000 annual kilometers, you could already save with PAYD, and more if you reduce your mileage, for example, by carpooling. Only if you drive more than 100 daily commute kilometers or very high non-commute kilometers, would you pay more, but since driving is costly, even then the incremental costs would be small. For example, if you currently pay $1,200 annually for insurance and drive 25,000 annual kilometers in a 20,000 average annual kilometers rate class you would pay an additional $300 dollars, a 25% increase in insurance but only about 3% increase in total annual vehicle expenses, since driving such high annual kilometers costs about $10,000 in total expenses.

Since PAYD pricing gives motorists a significant new incentive to reduce their annual mileage, all road users benefit from increased safety, reduced traffic and parking congestion, and reduced air pollution. On average it is equivalent to a $0.60 per liter fuel price increase, although it is not a new fee, simply a different way to pay an existing fee, comparable to shifting from all-you-can-eat to al-a-carte restaurant pricing. If BC drivers respond normally to such price changes, fully applied PAYD would cause a 10-12% reduction in total personal vehicle travel, saving an average motorist $120-150 annually, and since higher-risk drivers pay more and so have greater incentives to reduce their mileage, it should provide even proportionately greater crash cost reductions. High mileage motorists would be the greatest beneficiaries of risk and congestion reductions. Even if you do pay a few hundred dollars more, you might consider it worthwhile if your chance of being injured by another driver is reduced more than ten percent.

There is also a fairness issue. The current pricing system overcharges lower-annual-kilometer motorists like you, and undercharges higher-annual-kilometer motorists compared with their true insurance risk costs, and since on average lower-income motorists drive their vehicles fewer annual kilometers than higher-income motorists, this is regressive.

Best wishes,


Response to response:

Dear PAYD in BC,

This is quite interesting, thank you for the additional information. I did not realize the average numbers were so high, that is quite surprising to me. 

Name Withheld